Workers compensation insurers in Mississippi do not have the right to void a policy based on a material misrepresentation made by an employer, the Mississippi Supreme Court ruled Thursday.
Answering a certified question from the 5th U.S. Circuit Court of Appeals in New Orleans, the state high court determined that policy rescission is not an available remedy in Mississippi – while cancellation and nonrenewal are permitted.
The case, American Compensation Insurance Co. vs. Hector Ruiz, Doing Business As Los Primoz Construction, stems from a 2018 workplace incident in which Raul Arpacio, an employee of Mr. Ruiz, was severely injured after falling 15 feet. Mr. Ruiz’s company was a subcontractor for Jesco Inc.
American Compensation Insurance, Mr. Ruiz’s workers comp insurer, paid more than $250,000 in medical and indemnity benefits to Mr. Arpacio but later sought court approval to retroactively void the policy because Mr. Ruiz said in his insurance policy application that his company didn’t perform work more than 15 feet in height.
Jesco, the general contractor on the project, sought the suit’s dismissal, contending the insurer wasn’t permitted to void the policy under state law. A federal judge agreed with Jesco and dismissed the lawsuit.
The state Supreme Court said it is the duty of workers comp insurers to pay benefits to injured workers regardless of whether employers made misrepresentations, and that rescinding a policy after the fact is not permitted under the state’s workers comp law.
